Arbitration is a private, out-of-court dispute resolution process—usually between parties to a contract—in which the dispute is resolved by one or more arbitrators rather than by judges and juries in the court system. Businesses often include an arbitration provision in the dispute resolution section of online agreements (terms of use) for consumer products and services.
In Texas, arbitration is governed by both federal and state laws. The Federal Arbitration Act (FAA) applies to interstate commerce cases and generally favors the enforcement of arbitration agreements. Texas follows the FAA's pro-arbitration stance but also has its own Texas Arbitration Act (TAA), which applies to intrastate disputes. The TAA is found in the Texas Civil Practice and Remedies Code, Chapter 171. It provides a framework for the conduct of arbitration proceedings, including the appointment of arbitrators, the arbitration process, and the confirmation, vacatur, modification, or correction of an arbitration award. Businesses in Texas frequently include arbitration clauses in their terms of use for consumer products and services, which typically require consumers to resolve disputes through arbitration instead of going to court. These clauses are generally enforceable, provided they meet certain legal requirements such as being clear, conspicuous, and not unconscionable or overly burdensome to the consumer.
